“Management's Discussion and Analysis of Financial Condition and Results
of Operations”

“Our sales performance in Business and Wholesale is consistent with our
expectations and reflects a robust delivery funnel that gives us
visibility into revenue for the quarters ahead. We posted growth in both
Total revenue as well as Business and Wholesale revenue, and continue to
see growth prospects in the long-term as demand drivers like video
streaming, wireless backhaul and cloud migration continue in their
robust trajectory.

“Additionally, we are advancing our fixed wireless technology strategy.
Fixed wireless provides a capital efficient mechanism to meet our CAF II
deployment obligations as well as a strong foundation for competitive
broadband to serve our mass market consumer and small business customers
in non-CAF II areas. We look forward to reporting progress over the
upcoming quarters,” said Anand Vadapalli, president and CEO of Alaska
Communications.

Reconciliations of non-GAAP financial measures to GAAP financial
measures can be found in tables at the end of this release and on the
company’s website at http://www.alsk.com
in the investment data section.

Laurie Butcher, Alaska Communications senior vice-president of finance,
said: “Our results reflect uncertainty in the FCC’s Rural Health Care
Program causing a negative impact on revenue of $0.7 million for both
the quarter and year to date and on Adjusted EBITDA of $1.5 million for
the quarter and $2.6 million year to date. While conservatively revising
Adjusted EBITDA guidance, we continue to proactively manage operating
expenses to mitigate the impacts. With our emphasis on capital
efficiency through the course of the year, we are also reducing capital
spending which will positively impact adjusted free cash flow. We remain
comfortable with both our revenue and Adjusted FCF guidance levels for
the year.”

2017 Guidance:

Total Revenue between $229 million and $235 million, consistent with
prior guidance

Adjusted EBITDA between $56 million and $59 million, reduced from $59
million and $61 million

Capital Expenditures between $32 million and $35 million, reduced from
$35 million and $38 million

The Company will host a conference call and live webcast on Wednesday,
November 8, 2017 at 3:00 p.m. Eastern Time to discuss the results.
Parties in the United States and Canada can access the call at
1-800-289-0459 and enter pass code 471977. All other parties can access
the call at 1-323-794-2558 and use the same code.

The live webcast of the conference call will be accessible from the
"Events Calendar" section of the Company's website (www.alsk.com).
The webcast will be archived for a period of 90 days. A telephonic
replay of the conference call will also be available two hours after the
call and will run until December 8, 2017 at 6:00 p.m. Eastern Time. To
hear the replay, parties in the U.S. and Canada can call 1-888-203-1112
and enter pass code 9115915. All other parties can call 1-719-457-0820
and enter pass code 9115915.

About Alaska Communications

Alaska Communications (NASDAQ: ALSK) is the leading provider of advanced
broadband and managed IT services for businesses and consumers in
Alaska. The company operates a highly reliable, advanced statewide data
network with the latest technology and the most diverse undersea fiber
optic system connecting Alaska to the contiguous U.S. For more
information, visit www.alaskacommunications.com
or www.alsk.com.

Non-GAAP Measures

In an effort to provide investors with additional information regarding
our financial results, we have provided certain non-GAAP financial
information, including Adjusted EBITDA, Adjusted Free Cash Flow and Net
Debt. Adjusted EBITDA eliminates the effects of period to period changes
in costs that are not directly attributable to the underlying
performance of the Company’s business operations and is used by
Management and the Company’s Board of Directors to evaluate current
operating financial performance, analyze and evaluate strategic and
operational decisions and better evaluate comparability between periods.
Adjusted Free Cash Flow is a non-GAAP liquidity measured used by
Management and the Company’s Board of Directors to assess the Company’s
ability to generate cash and plan for future operating and capital
actions. Adjusted EBITDA and Adjusted Free Cash Flow are common measures
utilized by our peers (other telecommunications companies) and we
believe they provide useful information to investors and analysts about
the Company’s operating results, financial condition and cash flows. Net
Debt provides Management and the Company’s Board of Directors with a
measure of the Company’s current leverage position. The definition of
these non-GAAP measures is provided on Schedules 4, 6 and 9 to this
press release. Adjusted EBITDA and Adjusted Free Cash Flow should not be
considered a substitute for Net Income, Net Cash Provided by Operating
Activities and other measures of financial performance recorded in
accordance with GAAP. Reconciliations of our non-GAAP measures to our
nearest GAAP measures can be found in the tables in this release and on
our website in the investment data section. Other companies may not
calculate non-GAAP measures in the same manner as Alaska Communications.
The Company does not provide reconciliations of guidance for Adjusted
EBITDA to Net Income, and Adjusted Free Cash Flow to Net Cash from
Operating Activities, in reliance on the unreasonable efforts exception
provided under Item 10(e)(1)(i)(B) of Regulation S-K. The Company does
not forecast certain items required to develop the comparable GAAP
financial measures. These items are charges and benefits for
uncollectible accounts, certain other non-cash expenses, unusual items
typically excluded from Adjusted EBITDA and Adjusted Free Cash Flow, and
changes in operating assets and liabilities (generally the most
significant of these items, representing cash outflows of $7.7 million
in the nine-month period of 2017).

Forward-Looking Statements

This press release includes certain "forward-looking statements," as
that term is defined in the Private Securities Litigation Reform Act of
1995. These forward-looking statements are based on management's beliefs
as well as on a number of assumptions concerning future events made
using information currently available to management. Readers are
cautioned not to put undue reliance on such forward-looking statements,
which are not a guarantee of performance and are subject to a number of
uncertainties and other factors, many of which are outside the Company’s
control. Such factors include, without limitation, Federal and Alaska
Universal Service Fund changes including Rural Health Care Program
funding limitations, adverse economic conditions, the effects of
competition in our markets, unforeseen challenges when entering new
markets, our relatively small size compared with our competitors, the
Company’s ability to compete, manage, integrate, market, maintain, and
attract sufficient customers for its products and services, adverse
changes in labor matters, including workforce levels, our ability to
service our debt and refinance as required, labor negotiations,
including renegotiating our collective bargaining agreement, employee
benefit costs, our ability to control other operating costs, disruption
of our supplier’s provisioning of critical products or services, the
impact of natural or man-made disasters, changes in Company's
relationships with large customers, unforeseen changes in public
policies, regulatory changes, changes in technology and standards, our
internal control over financial reporting, and changes in accounting
standards or policies, which could affect reported financial results.
For further information regarding risks and uncertainties associated
with the Company’s business, please refer to the Company's SEC filings,
including, but not limited to, the sections entitled "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" in our annual report on Form 10-K and quarterly reports
on Form 10-Q. Copies of the Company's SEC filings may be obtained by
contacting its investor relations department at (907) 564-7556 or by
visiting its investor relations website at www.alsk.com.

Schedule 1

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.

CONSOLIDATED SCHEDULE OF OPERATIONS

(Unaudited, In Thousands Except Per Share Amounts)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Operating revenues

$

56,703

$

56,483

$

171,970

$

169,073

Operating expenses:

Cost of services and sales (excluding depreciation and
amortization)

26,690

25,393

78,286

77,064

Selling, general & administrative

17,261

18,110

52,792

53,036

Depreciation and amortization

9,193

8,748

27,124

25,908

Loss on disposal of assets, net

40

132

73

284

Total operating expenses

53,184

52,383

158,275

156,292

Operating income

3,519

4,100

13,695

12,781

Other income and (expense):

Interest expense

(3,577

)

(3,869

)

(11,335

)

(11,590

)

Loss on extinguishment of debt

(93

)

-

(7,527

)

(336

)

Interest income

13

7

27

18

Total other income and (expense)

(3,657

)

(3,862

)

(18,835

)

(11,908

)

(Loss) income before income tax benefit (expense)

(138

)

238

(5,140

)

873

Income tax benefit (expense)

422

82

1,886

(217

)

Net income (loss)

284

320

(3,254

)

656

Less net loss attributable to noncontrolling interest

(36

)

(34

)

(100

)

(101

)

Net income (loss) attributable to Alaska Communications

$

320

$

354

$

(3,154

)

$

757

Basic and Diluted

$

0.01

$

0.01

$

(0.06

)

$

0.01

Weighted average shares outstanding:

Basic

52,434

51,340

52,159

51,105

Diluted

53,794

52,454

52,159

52,130

Schedule 2

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited, In Thousands Except Per Share Amounts)

September 30,

December 31,

Assets

2017

2016

Current assets:

Cash and cash equivalents

$

11,224

$

21,228

Restricted cash

11,927

1,917

Accounts receivable, net of allowance of $2,165 and $1,115

24,976

25,062

Materials and supplies

5,635

4,917

Prepayments and other current assets

7,522

5,995

Total current assets

61,284

59,119

Property, plant and equipment

1,367,927

1,349,899

Less: accumulated depreciation and amortization

(1,001,953

)

(983,050

)

Property, plant and equipment, net

365,974

366,849

Deferred income taxes

16,542

14,718

Other assets

1,864

1,674

Total assets

$

445,664

$

442,360

Liabilities and Stockholders' Equity

Current liabilities:

Current portion of long-term obligations

$

17,251

$

1,973

Accounts payable, accrued and other current liabilities

37,767

38,180

Advance billings and customer deposits

4,353

4,167

Total current liabilities

59,371

44,320

Long-term obligations, net of current portion

170,414

177,626

Other long-term liabilities, net of current portion

59,642

61,538

Total liabilities

289,427

283,484

Commitments and contingencies

Alaska Communications stockholders' equity:

Common stock, $.01 par value; 145,000 authorized

524

515

Additional paid in capital

158,184

159,474

(Accumulated deficit) retained earnings

(1,057

)

752

Accumulated other comprehensive loss

(2,434

)

(2,910

)

Total Alaska Communications stockholders' equity

155,217

157,831

Noncontrolling interest

1,020

1,045

Total stockholders' equity

156,237

158,876

Total liabilities and stockholders' equity

$

445,664

$

442,360

Schedule 3

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited, In Thousands)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Cash Flows from Operating Activities:

Net income (loss)

$

284

$

320

$

(3,254

)

$

656

Adjustments to reconcile net income (loss) to net cash provided by
operating activities:

Depreciation and amortization

9,193

8,748

27,124

25,908

Loss on the disposal of assets, net

40

132

73

284

Amortization of debt issuance costs and debt discount

414

1,014

1,951

3,035

Loss on extinguishment of debt

93

-

7,527

336

Amortization of deferred capacity revenue

(884

)

(862

)

(2,601

)

(2,564

)

Stock-based compensation

261

700

842

2,147

Deferred income tax (benefit) expense

(374

)

48

(1,840

)

543

Tax deficiencies from share-based payments

-

-

-

(51

)

Charge for uncollectible accounts

929

89

2,562

166

Other non-cash expense, net

142

52

430

466

Income taxes payable (receivable)

3

(130

)

577

(852

)

Changes in operating assets and liabilities

(1,478

)

(633

)

(7,703

)

(1,710

)

Net cash provided by operating activities

8,623

9,478

25,688

28,364

Cash Flows from Investing Activities:

Capital expenditures

(13,532

)

(8,689

)

(24,054

)

(22,351

)

Capitalized interest

(309

)

(263

)

(772

)

(811

)

Change in unsettled capital expenditures

4,050

(25

)

2,007

(9,181

)

Proceeds on sale of assets

2

1

6

2,664

Net cash used by investing activities

(9,789

)

(8,976

)

(22,813

)

(29,679

)

Cash Flows from Financing Activities:

Repayments of long-term debt

(365

)

(869

)

(174,378

)

(12,355

)

Proceeds from the issuance of long-term debt

-

-

183,000

-

Debt issuance costs and discounts

(51

)

-

(5,559

)

(44

)

Cash paid for debt extinguishment

(243

)

-

(5,522

)

(150

)

Cash proceeds from noncontrolling interest

75

-

75

75

Payment of withholding taxes on stock-based compensation

(2

)

-

(601

)

(472

)

Proceeds from issuance of common stock

(3

)

2

116

130

Net cash used by financing activities

(589

)

(867

)

(2,869

)

(12,816

)

Change in cash, cash equivalents and restricted cash

(1,755

)

(365

)

6

(14,131

)

Cash, cash equivalents and restricted cash, beginning of period

24,906

24,059

23,145

37,825

Cash, cash equivalents and restricted cash, end of period

$

23,151

$

23,694

$

23,151

$

23,694

Supplemental Cash Flow Data:

Interest paid

$

3,279

$

1,653

$

10,874

$

8,012

Income taxes (refunded) paid, net

$

(52

)

$

-

$

(624

)

$

577

Schedule 4

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.

ADJUSTED EBITDA

(Unaudited, In Thousands)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Net income (loss)

$

284

$

320

$

(3,254

)

$

656

Add (subtract):

Interest expense

3,577

3,869

11,335

11,590

Loss on extinguishment of debt

93

-

7,527

336

Interest income

(13

)

(7

)

(27

)

(18

)

Depreciation and amortization

9,193

8,748

27,124

25,908

Loss on disposal of assets, net

40

132

73

284

Income tax (benefit) expense

(422

)

(82

)

(1,886

)

217

Stock-based compensation

261

700

842

2,147

Long-term cash incentives

-

180

-

585

Pension adjustment

-

(41

)

-

-

Net loss attributable to noncontrolling interest

36

34

100

101

Adjusted EBITDA

$

13,049

$

13,853

$

41,834

$

41,806

NonGAAP Measures:

The Company provides certain non-GAAP financial information, including
Adjusted EBITDA, Adjusted Free Cash Flow and Net Debt. Adjusted EBITDA
eliminates the effects of period to period changes in costs that are not
directly attributable to the underlying performance of the Company’s
business operations and is used by Management and the Company’s Board of
Directors to evaluate current operating financial performance, analyze
and evaluate strategic and operational decisions and better evaluate
comparability between periods. Adjusted Free Cash Flow is a non-GAAP
liquidity measure used by Management to assess the Company’s ability to
generate cash and plan for future operating and capital actions.
Adjusted EBITDA and Adjusted Free Cash Flow are common measures utilized
by our peers (other telecommunications companies) and we believe they
provide useful information to investors and analysts about the Company’s
operating results, financial condition and cash flows. Net Debt provides
Management and the Board of Directors with a measure of the Company’s
current leverage position.

The Company does not provide reconciliations of guidance for Adjusted
EBITDA to Net Income, and Adjusted Free Cash Flow to Net Cash Provided
by Operating Activities, in reliance on the unreasonable efforts
exception provided under Item 10(e)(1)(i)(B) of Regulation S-K. The
Company does not forecast certain items required to develop the
comparable GAAP financial measures. These items are charges and benefits
for uncollectible accounts, certain other non-cash expenses, unusual
items typically excluded from Adjusted EBITDA and Adjusted Free Cash
Flow, and changes in operating assets and liabilities (generally the
most significant of these items, representing cash outflows of $7.7
million in the nine-month period ended September 30, 2017).

Adjusted EBITDA and Adjusted Free Cash Flow are not GAAP measures and
should not be considered a substitute for net income, net cash provided
by operating activities, or net cash provided or used. Adjusted EBITDA
as computed above is not consistent with the definition of Consolidated
EBITDA referenced in our 2017 Senior Credit Agreement and 2015 Senior
Credit Agreements, and other companies may not calculate Non-GAAP
measures in the same manner we do.

Adjusted EBITDA is defined as net income (loss) before interest, loss on
extinguishment of debt, depreciation and amortization, gain or loss on
asset purchases or disposals, income taxes, stock-based compensation,
pension adjustments, net loss attributable to noncontrolling interest
and expenses under the Company’s long term cash incentive plan (“LTCI”).
LTCI expenses are considered part of an interim compensation structure,
which ended in 2016, to mitigate the dilutive impact of additional share
issuances for executive compensation.

* Quarterly Adjusted Free Cash Flow fluctuates and should not be viewed
as an indicator of annual performance. Onetime events, seasonality of
capital spend and the timing of interest payments may result in negative
Adjusted Free Cash Flow in one or more quarters.

NonGAAP Measures:

Adjusted Free Cash Flow is a non-GAAP liquidity measure and is defined
as Adjusted EBITDA, less recurring operating cash requirements which
include capital expenditures, cash income taxes refunded or paid, cash
interest paid, amortization of GCI capacity revenue, and cash receipts
and payments associated with the purchase of the North Slope fiber
network and establishment of our joint venture with QHL. Amortization of
deferred revenue associated with our interconnection agreement with GCI
is excluded from Adjusted Free Cash Flow because no cash was received by
the Company in connection with this agreement. Amortization of all other
deferred revenue, including that associated with other IRU capacity
arrangements, is included in Adjusted Free Cash Flow because cash was
received by the Company, typically at contract inception, and is being
amortized to revenue over the term of the relevant agreement.

See Schedule 3 for Net cash provided by operating activities, Net cash
used by investing activities, and Net cash used by financing activities.

See Schedule 5 for the reconciliation of net cash provided by operating
activities to Adjusted Free Cash Flow.

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